E Political Conflicts Are At A Record High Since The Trump Presidency

“The Partisan Conflict Index tracks the degree of political disagreement among U.S. politicians at the federal level by measuring the frequency of newspaper articles reporting disagreement in a given month. Higher index values indicate greater conflict among political parties, Congress, and the President. The index tends to increase near elections and during debates over such contentious policies as the debt ceiling and health-care reform” (Partisan Conflict Index, Philadelphia Federal Reserve, August 9, 2017)

Partisan bickering among federal politicians (i.e. Congress and the White House) tends to increase uncertainty in the U.S. among firms and households. Increased uncertainty is certainly not welcome since historically it is associated with slower economic growth, which in turn delays business investment and consumer spending.

The latest increase in U.S partisan bickering can be traced directly to Donald Trump’s presidency. He still wants to build a wall along America’s southern border, even though Mexico has refused to pay for the wall.   

In order to secure the $1.6 billion required to start construction on the wall, Trump actually threatened that he would not sign a spending bill to keep the government running—due by the end of September, unless Congress agreed to finance the start of the wall.

However, Trump recently reached an agreement in principle with Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi that would preserve the Deferred Action for Childhood Arrivals program.

He apparently also has a deal with the two Democrats to raise the debt limit while funding hurricane relief. Of course, by reaching across the aisle, Trump has cut out congressional Republican leaders from the negotiations.

Even though the U.S. political environment is still quite volatile, at least the chance of an imminent government shutdown has receded.

Disclosure: None.

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